Dena Bank vs Rajesh Kumar And Ors.

P.K. Bhasin, J

The appellant Bank is aggrieved by the following order passed by the DRT on 18.12.2015 in S.A. No. 461/2012 which had been filed by the respondents herein; against it under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act):

"1. The present application in filed by the applicant request for extension of time for balance payment.

The learned Counsel for applicant submits that the applicant was suffering from heard attack and due to that he could not deposited the entire amount with the Bank as per the direction of this Tribunal and requests that 90 days may be granted to pay the balance dues of the Bank.

On the other side, the learned Counsel for respondent Bank vehemently opposed to grant any relief to the applicant and submits that Bank has to recover a sum of Rs. 98.00 lacs which is opposed by the other side and submits that the Bank has issued notice for a sum of Rs. 98.00 lacs out of which the applicant has deposited a sum of Rs. 47.00 lacs.

After hearing both sides at length and perusing the records, this Tribunal is of the view that the basic purpose for enactment of this Act to recover the NPA amount and the interest is not defined in the Act. Though the Bank is entitled to charge while filing the suit/OA that is not mentioned under any law.

In view of the above, I hereby directed the applicant to pay the entire dues along with interest within 90 days to the Bank.

Till then, the interim order already passed by this Tribunal on 30.4.2015 shall continue.

With the above direction, the present IA(M) is disposed of."

The earlier order passed by the DRT on 30.4.2015 disposing of the Securitisation Application (S.A.), reference to which is made in the impugned order also and which order also gives the relevant background facts leading to the filing of the S.A. by the respondents, out of whom respondent No. 2 is the borrower to whom the appellant Bank had given financial facility of Rs. 250 crores in 2010 and respondent No. 1 was the mortgagor/guarantor who had created equitable mortgage of his land for the re-payment or the said loan amount is also being re-produced below:-

"1. The present securitisation application has been filed by the applicant against the action of the respondent Bank initiated under the SARFAESI Act, 2002 qua the properties in question i.e.; (i) Plot No. 495/7, Khadipur Industrial Area, Near Shiv Mandir, Pataudi Road, Gurgaon; Haryana-122001 (Land & Building) Khewat/Khata No. 254, Mustkil No. 20, Kila No. 8 (8-0), 13/1 (2-0), Kitta 2 Rakbakanal 10 Maria 0"s 134/1800 part being 14 Maria 8 Sarsai i.e. 450 sq. yds. Measuring 45ft X 90 ft. situated at Mohalla Siwana, Village/MauzaKadipur, Tehsil Gurgaon and (ii) Plot No. 495/7, Khadipur Industrial Area, Near Shiv Mandir, Pataudi Road, Gurgaon; Haryana-122001 property (Land & Building) Khewat/Khata No. 254, Mustkil No. 20, Kila No. 8 (8-0), 13/1 (2-0), Kitta 2 Rakbakanat 10 Maria 0 "s 81/1800 part being 9 Maria i.e., 270 sq. yds. Measuring 27ft. X 90ft. situated at Moholla Siwana, Village/Mauza (herein after the properties in question).

The case of the applicant that the applicant herein has availed the loan facility of Rs. 250.00 lacs availed from the respondent Bank against the mortgage of the properties in question.

The learned Counsel for the applicant submits that the applicant has already deposited the substantial amount - i.e. approximately Rs. 40.00 lacs with the respondent Bank after the declaration of the account as N.P.A. and the applicant is ready and willing to pay the dues of the respondent Bank within a period of six months provided some concession in the rate of interest may be granted to them. He also raised the objection that the respondent Bank has charged the exorbitant rate of interest.

On the other hand the learned Counsel for the respondent Bank has opposed for granting any concession in the rate of interest and he submits that he Bank has charged the interest as per the guidelines of RBI. He further submits that as per the notice dated 20.3.2012 issued by the Bank under Section 13(2) of SARFAESI Act, 2002 an amount of Rs. 89.87 lacs plus future interest is the outstanding against the borrower. However, the respondent Bank in its reply has not disclosed at what rate of interest they have charged the interest in the present account.

Heard the rival contentions of the learned Counsel for both the parties and this Tribunal is of the considered view that the Hon'ble Supreme Court in various matters has held that the right to property is the constitutional right of the owner and in order to save their property the applicant has come forward to settle this matter with the respondent Bank. The purpose of enacting the SARFAESI Act, 2002 is the speedy recovery of the dues of the Banks and financial institution and no fruitful purpose would be served to drag the present litigation further when the applicant has come forward to clear the dues of the respondent Bank within a period of six months but the only hitch is that the applicant wants some concession in the rate of interest charged by the respondent Bank.

In view of the above facts and circumstances, I hereby exercise my power as per the provision of Section 19(20) of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 which is analogous to Section 34 of CPC, on filing of the suit/claim, the contract between the parties comes to an end and the Court/Tribunal has discretion to award the same depending upon the circumstances of each case and the same principle has been laid down by the Hon'ble Apex Court in the case of Central Bank of India v. Ravindra & Others and thus I hereby direct the respondent Bank to charge the interest @ 12% simple on reducing basis from the date of NPA till the date of realization.

Thus, I hereby direct the applicant herein to clear the balance dues (less the amount already deposited by the applicant herein) of respondent Bank along with interest @ 12% simple on reducing basis to be charged from the date of NPA till the date of realization to be deposited within a period of six months through six equal monthly instalments. The applicant is also directed to file an affidavit-cum-undertaking, within a period of three working days with advance copy to the other side, to this effect that he will make the payment as above.

It is made clear that in case of default on the part of the applicant, the respondent Bank, through the same Court receiver, shall be at liberty to proceed further under the SARFAESI Act, 2002 in accordance with law.

Till then the respondent Bank/Court Receiver is hereby restrained from taking physical possession over the property in question.

The applicant is also directed to approach, within a period of one week, the respondent Bank for obtaining the revised statement of account and the respondent Bank is also directed to supply the revised statement of account to the applicant herein.

On receipt of its entire dues, the respondent Bank shall release the original title documents in accordance with law and issue the No Dues Certificate immediately.

With the above observations, nothing is survived in this securitization application and hence the same is disposed of.

File be consigned to records."

This order dated 30.4.2015 passed by Mr. Ashish Kalia, learned Presiding Officer of DRT clearly demonstrates that he had not disposed of the S.A. in the manner in which it should have been actually decided. He did not discuss the grounds of opposition taken by the Bank or the grounds taken by the applicants before him while challenging the action(s) of the secured creditor under Sections 13/14 of SARFAESI Act. The learned Presiding Officer of the DRT seems to have proceeded on the assumption that whenever some application is filed in DRT under Section 17 by a borrower or mortgagor or any other aggrieved person the petition is to be disposed of without going into the merits of the case put forth in the application and relief in any form has to be granted as if grant or rejection of relief is within the discretion of the DRT and not a matter of law. The appellant Bank had granted credit facility of over two crores in the year 2010 to respondent No. 2's proprietorship Firm and out of that amount which was availed of in full by him only a paltry sum of approximately Rs. 40 lacs was being claimed to have been returned to the Bank during all these years and of which fact he was seeking to seek credit from the DRT and the learned Presiding Officer also very generously gave him all the credit by observing that the object of SARFAESI Act is speedy recovery of the dues of the Bank but without specifying as to how he was helping in the achievement of that object by observing that no useful purpose was going to be served by dragging this litigation further when the borrower himself was offering to clear the entire dues of the Bank 'but the only hitch is that the applicant wants some concession in the rate of interest charged by the respondent Bank.'. This offer was conditional and in fact implies that if DRT were not to assure the borrower some concession in the interest rate he would not have offered to clear the outstanding dues of the Bank and would have continued his legal battle.

The proper course for an honest and genuine borrower willing to clear his liability is to tell the DRT that he will clear the loan within a fixed period and a prayer can then be made for grant of some concession in the rate of interest payable pendente lite and till actual payment is made and then the DRT can exercise its discretion in the facts and circumstances of a particular case before it. There has first to be unconditional admission of liability by the borrower/guarantor before the idea of grant of concession in interest rate enters the mind of the Presiding Officer. The Presiding Officer had not stated in his order as to how the recovery of the Bank's dues will be expedited by summary disposal of the S.A. without requiring the borrower/mortgagor both of whom had petitioned before him for quashment of the action of the Bank initiated under the provisions of SARFAESI Act, to demonstrate the strength in their challenge to the Bank's action and their own bona fides. When the Bank served upon them notice under Section 13(2) of SARFAESI Act they showed their willingness to clear the Bank's dues and requested the Bank for accepting Rs. 92.22 lacs by two post-dated cheques which request was accepted but both the cheques were dishonoured. This fact should have disentitled them for any relief but the DRT still showed generosity towards them. When the mortgaged property was in the danger of being sold by the Bank that they rushed to DRT and DRT in turn immediately came to the rescue of the defaulters by extending the period of repayment of the Bank's dues without even forming even a prima facie opinion about the force in applicants' case. Grant of reliefs to defaulters in this fashion cannot be approved of. The respondents in any case did not make any payment as per the order of the DRT.

Even the learned Counsel for the respondents could not justify before me the manner in which the S.A. was disposed of by the learned Presiding Officer of DRT and he simply stated that the respondents had always the intentions of fulfilling their commitments made to the appellant Bank at the time of grant of credit facility extended to them in the year 2010.

The respondents approached the DRT again for more time for making payment and once again DRT granted their request vide order dated 18.11.2015, which has already been re-produced. Once again the DRT took the view that the object of SARFAESI Act is the recovery of dues of Banks and without giving any reason granted extension of time to the respondents. So, the impugned order cannot be sustained. This appeal is allowed and order dated 18.11.2015 is set aside. In case even till date the respondents have not cleared the Bank's dues the appellant will be at liberty to take recovery steps forthwith and DRT shall not entertain any request for extension of time if approached by the respondents again.